Lewiston’s city administrator says a property tax cap would hurt local governments.
City officials shouldn’t be frightened by a proposed property tax cap, according to supporter Phil Harriman.
City leaders around the state have been talking about the effect the cap would have on their bottom lines. In Lewiston, City Administrator Jim Bennett has said it would spell certain doom for local governments.
Harriman believes such fear is not warranted.
“I blame that on a lack of clarity, rather than a sense that they are wrong,” said Harriman, a Yarmouth financial consultant and former state senator.
“There are so many conflicting statements going on about it, and I suspect that most cities and town finance folk are doing their very best to paint as bad a picture as they can,” Harriman said.
He has urged the Maine Supreme Judicial Court to rule on some aspects of the proposed cap that are vague, such as how cities would include debt service.
“We need some clarity, some authority, on the issue,” Harriman said. “I hope the Legislature asks the Supreme Court to weigh in.”
Harriman has stepped forward as a spokesman for the tax-relief effort initiated by Topsham activist Carol Palesky. The question, “Do you want to limit property tax to 1 percent of the assessed value of the property?” will be on the November ballot, unless state lawmakers vote to place it on the June ballot.
The cap would allow cities to levy $10 in property taxes per $1,000 of value, based on 1997 assessments. Values can be adjusted for properties that have been sold or renovated since 1997.
Lewiston’s city-wide property value is currently estimated at $1.49 billion. In 1997, it was $1.26 billion.
City Administrator Bennett’s numbers assume the worst-case scenario, that the city gets 1 percent of total property values in 1997. That would be about $12.6 million. Androscoggin County takes its $2 million share and another $7.4 million goes to pay the city’s debts. That leaves about $3.2 million to run the city and the schools.
“It’s interesting to note, that $3.2 million doesn’t even cover the police department budget,” Bennett said. The proposed police budget for the coming year is $4.6 million.
Harriman’s forecast is more optimistic. Cities could levy additional property taxes to pay for debt, he said. In Lewiston’s case, the city would get 1 percent of property values, plus the cost of the debt. That’s about $20.1 million from property taxes but about $10.6 million after paying the county and debts.
Bennett doubts that. As written, the cap would allow only voter-approved debt into the calculation. Lewiston has two, the bond issue to build the Lewiston police station and a bond voters approved two years ago allowing the city to refinance its pension debt. But the city is due to pay off the police station this year, and the pension refinance isn’t tied to any taxable property.
“So I don’t think those will help us,” Bennett said. “Besides, even if we can keep the debt service, we go from a total disaster to a mild catastrophe.”
In 2003, the city collected $38.3 million in property taxes, before county taxes and debt payments were made. Reducing it to $20.1 million would mean an $18.2 million cut in revenues.
In Harriman’s view, the measure wasn’t crafted to hurt cities, but to help taxpayers.
“Some will say that this is draconian, that it will just hurt the cities,” Harriman said. “But I think it’s time to put another lens on the camera and look at the people paying the taxes. These are people struggling to maintain a decent quality of life, and along comes property tax increases that have nothing to do with their incomes.”
Under the proposed tax cap, property taxes would increase only when properties change hands. That would protect homeowners that have been in their homes for many years, Harriman said.
“But as the properties turn over, there is more cash flow to municipalities that reflects real market values,” he said.
City councilors from Lewiston, Auburn and Portland are scheduled to discuss tax reform at an informal exchange tonight at the Hilton Garden Inn.
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